Exhibit 4.4
POPULAR, INC. RETIREMENT SAVINGS PLAN
FOR PUERTO RICO SUBSIDIARIES
January 1, 2001
POPULAR, INC. RETIREMENT SAVINGS PLAN
FOR PUERTO RICO SUBSIDIARIES
Table of Contents
ARTICLE I
Definitions ...........................................................2
ARTICLE II
Participation ........................................................11
ARTICLE III
Participant Contributions ............................................13
ARTICLE IV
Employer Contributions ...............................................21
ARTICLE V
Investment of Contributions and Valuation of Accounts ................24
ARTICLE VI
Distributions ........................................................28
ARTICLE VII
Plan Administration ..................................................34
ARTICLE VIII
Claims Procedure .....................................................37
ARTICLE IX
Amendment or Termination of the Plan or Discontinuance
of Contributions .....................................................39
ARTICLE X
Miscellaneous Provisions .............................................42
APPENDIX NO. 1
Retirement Savings Plan for Puerto Rico Subsidiaries ................1-1
APPENDIX NO. 2
Retirement Savings Plan for Puerto Rico Subsidiaries ................2-1
APPENDIX NO. 3
Retirement Savings Plan for Puerto Rico Subsidiaries ................3-1
APPENDIX NO. 4
Retirement Savings Plan for Puerto Rico Subsidiaries ................4-1
APPENDIX NO. 5
Retirement Savings Plan for Puerto Rico Subsidiaries ................5-1
APPENDIX NO. 6
Retirement Savings Plan for Puerto Rico Subsidiaries ................6-1
POPULAR, INC. RETIREMENT SAVINGS PLAN FOR
PUERTO RICO SUBSIDIARIES
The Popular, Inc., Retirement Savings Plan for Puerto Rico Subsidiaries (the
"Plan"), hereinafter set forth, is the renamed, amended and restated Popular
Securities, Inc.-Institutional 1165(e) Plan into which all of the plans of the
Puerto Rico subsidiaries of Popular, Inc. qualified under Section 1165 of the
Puerto Rico Internal Revenue Code of 1994, as amended were merged as of midnight
on December 31, 2000. The effective date of the renamed, amended and restated
plan is January 1, 2000.
It is the intention of Popular, Inc. that all of its subsidiaries offer the same
level of employee benefits to their employees. The Popular, Inc. Retirement
Savings Plan for Puerto Rico Subsidiaries implements this policy by offering
employees of all Puerto Rico subsidiaries of Popular, Inc. a tax qualified
profit sharing plan with a cash or deferred arrangement.
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ARTICLE I
DEFINITIONS
Where the following words and phrases appear in the Plan, they shall have the
respective meanings as set forth below, unless the context in which they are
used clearly indicates a different meaning.
1.01 Account
The Account established and maintained on behalf of a Participant, including a
Participant's "Employer Contribution Account" and "Employee Contribution
Account".
1.02 Administrative Committee
The persons appointed by Popular, Inc. to administer the Plan in accordance with
the provisions of Article VIII. The Administrative Committee shall serve as the
Plan Administrator.
1.03 Affiliated Company
An Employer and any corporation which is a member of a controlled group of
corporations (as defined in Section 210(a) of ERISA) which includes (a) the
Employer and (b) any trade or business (whether or not incorporated) which is
under common control (as defined in Section 210(b) of ERISA) with the Employer.
A corporation or an unincorporated trade or business shall not be considered an
Affiliated Company during any period it does not satisfy clause (a) or (b) of
this definition.
1.04 Anniversary Date
The Effective Date and each January 1 thereafter.
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1.05 Beneficiary
The person or persons designated to receive benefits payable under the Plan in
the event of a Participant's death. Such designation may be changed at any time
by the Participant. A Participant may also name one or more contingent
Beneficiaries to receive any benefits payable in the event of his death with no
surviving primary Beneficiary. In the absence of any designation, or if no
designated person is living when a benefit is payable, Beneficiary shall mean
the following person or persons, in the following order:
(i) The Participant's spouse,
(ii) The Participant's issue in equal shares per stirpes,
(iii) The Participant's parents,
(iv) The Participant's sisters and brothers in equal shares,
(v) The Participant's estate.
1.06 Compensation
Unless otherwise defined herein, total compensation currently includible for
income tax purposes paid to a Participant by an Employer during the Plan Year.
1.07 Early Retirement Date
The date a Participant attains age 55 with no less than 10 Years of Service.
1.08 Effective Date
The effective date is January 1, 2001.
1.09 Employee
Subject to the following sentence, any person who is employed in Puerto Rico on
or after the Effective Date by the Employer (or who is on an authorized leave of
absence and who was employed immediately preceding such leave). The following
individuals should not be considered Employees for purposes of determining
eligibility to
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participate in this Plan (a) any person who is covered by a collective
bargaining agreement (unless the collective bargaining agreement specifically
provides for his inclusion in this Plan); or (b) an individual described in
Section 2.01(c).
1.10 Employee Contribution Account
That portion of a Participant's Account to which Employee Before-Tax, After-Tax
and rollover contributions are made pursuant to Article III.
1.11 Employer
Any Affiliated Company which has expressly adopted the Plan with the consent of
Popular, Inc. in accordance with adoption procedures established by Popular,
Inc., in its sole discretion.
1.12 Employer Contribution Account
That portion of a Participant's Account to which Employer Matching and Profit
Sharing Contributions are made pursuant to Article IV.
1.13 Employment Commencement Date
For all purposes of the Plan, the date on which a person employed by the
Employer or an Affiliated Company first performs an Hour of Service.
1.14 ERISA
The Employee Retirement Income Security Act of 1974, as now in effect or as
hereafter amended. All citations to sections of the ERISA are to such sections
as they may from time to time be amended or renumbered.
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1.15 Highly Compensated Employee
An employee who during the relevant period is a highly compensated employee as
defined in PR Code Section 1165(e)(3)(E)(iii).
1.16 Hour of Service
Each hour for which a person is directly or indirectly compensated by the
Employer or an Affiliated Company for the performance of duties, including each
such hour during which a person was covered by a collective bargaining
agreement.
1.17 Investment Fund
Any fund for investment of contributions as described in Section 5.03.
1.18 Investment Committee
The persons appointed by Popular, Inc. responsible for selecting the Investment
Funds.
1.19 Maternity or Paternity Leave
An Employee's absence from work for the Employer (a) by reason of the pregnancy
of such Employee; (b) by reason of the birth of a child of such Employee; (c) by
reason of the placement of a child with the Employee in connection with the
adoption of such child by such Employee; or (d) for purposes of caring for a
child of such Employee immediately following the birth of the child or the
placement of the child with such Employee. Such leave may not exceed twenty-four
months and thereafter shall be deemed a Termination of Employment unless the
individual subsequently returns to employment with an Employer or an Affiliated
Company or is granted another type of approved leave.
An Employee shall be required to furnish the Administrative Committee with such
information as may be reasonably required in order to establish (i) that the
Employee's
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absence is one described in this Section and (ii) the number of days during such
absence.
1.20 Normal Retirement Date
The date on which a Participant attains age 65.
1.21 Participant
An Employee eligible to participate in the Plan who has satisfied the
requirements of Section 2.01 (an Active Participant), or a former Employee
receiving or eligible to receive a benefit (an Inactive Participant).
For purposes of this Section 1.21, any person employed by an Employer or an
Affiliated Company who is not an Employee but who will be eligible for benefits
upon his Termination of Employment shall be referred to as an Inactive
Participant.
1.22 Period of Severance
The period, measured in full years and months, between a Participant's Severance
from Service Date and a subsequent Reemployment Commencement Date. However, in
the case of a leave of absence that would be the type of leave that would be
required to be granted under the Family and Medical Leave Act of 1993 ("Family
and Medical Leave Act") if an employee was covered by such leave, the portion of
such leave which is not in excess of the period granted under the Family and
Medical Leave Act shall not be included in a Participant's Period of Severance.
Notwithstanding the above, leaves of absence formally approved by the Employer
as leaves in which service credit will be given under this Plan, shall not
constitute a Period of Severance but shall be considered as Years of Service in
determining service for vesting and eligibility provided that the Participant
returns to employment of the Employer immediately following such leave of
absence.
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1.23 Plan
The retirement plan set forth herein and as amended hereafter, which is known as
the:
"Popular, Inc. Retirement Savings Plan for Puerto Rico Subsidiaries"
1.24 Plan Year
The calendar year.
1.25 PR Code
The Puerto Rico Internal Revenue Code of 1994, as now in effect or as hereafter
amended. All citations to sections of the PR Code are to such sections as they
may from time to time be amended or renumbered.
1.26 Reemployment Commencement Date
The date on which a person formerly employed by the Employer or an Affiliated
Company first performs an Hour of Service after a Period of Severance.
1.27 Retirement
The date on which a Participant incurs a Severance from Service Date after
attaining his (i) Normal Retirement Date or (ii) his Early Retirement Date.
1.28 Severance from Service Date
The earliest of the following:
(i) The date of a person's Termination of Employment or death.
(ii) The day following a period of one full year during which a person
previously employed by the Employer does not perform services for the Employer
or an Affiliated Company for any reason other than his resignation, discharge,
retirement, or death. These reasons shall include, but shall not be limited to,
vacation, holiday, sickness, disability, leave of absence, or layoff.
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(iii) the second anniversary of a Participant's absence due to Maternity or
Paternity Leave.
For all purposes of the Plan, a person's employment with the Employer or an
Affiliated Company shall be deemed to have terminated as of a Severance from
Service Date.
1.29 Termination of Employment
A Participant's termination of employment with an Affiliated Company, whether
voluntary or involuntary, for any reason, including but not limited to quitting,
discharge or incurrence of a Total and Permanent Disability. However, a
Termination of Employment shall not include a Maternity or Paternity Leave or
Family and Medical Act Leave, transfer to another Affiliated Company, or death.
1.30 Total and Permanent Disability
A physical condition of a Participant which results in benefit payments under
the Employer's long term disability plan.
1.31 Trust Agreements
One or more legally binding agreements between Popular, Inc. and the Trustees.
Any term defined in the Trust Agreements shall have the same meaning as therein
ascribed when used herein, unless the context clearly implies a different
meaning.
1.32 Trustees
The trustees named in the Trust Agreements, or their successors, if any.
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1.33 Trust Funds
The properties and monies which shall from time to time be held by the Trustees
under the Trust Agreements.
1.34 Valuation Date
Every day that the New York Stock Exchange is open for business, provided that a
Valuation Date for common stock of Popular, Inc. shall be the last business day
of every calendar month.
1.35 Years of Service.
The period measured in full months and years (as defined below) beginning on a
person's Employment Commencement Date and ending on his last Severance from
Service Date, but excluding the following:
(a) any intervening Period of Severance provided that the person's Reemployment
Commencement Date followed a period of at least one full year during which
he completed no Hours of Service.
(b) any Years of Service preceding a Period of Severance of at least 60 full
months provided:
(i) the Participant was not entitled to any vested benefit under the Plan
at the commencement of the Period of Severance, and
(ii) the length of the Period of Severance exceeded the greater of 60
months and his Years of Service determined as of the Severance from
Service Date, and
(iii)the Participant had not incurred a Total and Permanent Disability,
which disability continued throughout the Period of Severance.
A Year of Service shall include any period for which a person is directly or
indirectly compensated by the Employer or an Affiliated Company on account of a
period of time during which no duties are performed or for which back pay has
been received by the person (irrespective of whether mitigating damages have
been awarded or agreed to by the Employer or the Affiliated Company) due to:
(i) vacation or holiday,
(ii) illness or incapacity,
(iii) layoff,
(iv) jury duty,
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(v) military duty,
(vi) leave of absence.
For all purposes of this Section 1.35, a period beginning on any given day of a
month and ending on the day preceding the corresponding day of the following
month shall constitute a full month. Twelve such full months shall constitute a
full year.
For all purposes of the Plan, Years of Service shall also include any periods of
service with another employer for which credit is granted under the Plan
pursuant to the provisions of an Appendix to this Plan applicable to a
particular Employer. However, Years of Service for vesting purposes shall
exclude any service for the Employer or an Affiliated Company prior to the
Employee's attainment of age 18.
Effective on or after December 12, 1994, service credit with respect to
qualified military service will be provided in accordance with the Uniformed
Services Employment and Reemployment Rights Act of 1994.
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ARTICLE II
PARTICIPATION
2.01 Requirements for Participation
(a) Provided he has 18 years of age or more, an individual shall become a
Participant in the Plan as of the first day of the month coincident with or next
following the later of (1) the date he satisfies the definition of an Employee,
or (2) his completion of one Year of Service.
(b) If an Inactive or former Participant again becomes an Employee, he shall
immediately be eligible to participate in the Plan.
(c) An individual shall not be eligible to participate in the Plan if such
individual
(i) is classified by the Employer as a leased employee,
(ii) is classified by an Employer as performing services for an Affiliated
Company under an agreement or arrangement pursuant to which he is
treated as an independent contractor or
(iii)is not classified by an Affiliated Company as an employee for
purposes of withholding employment taxes.
The classifications by the Employer under the prior sentence shall be
determinative (irrespective of whether the individual is subsequently
reclassified or treated as an employee of an Affiliated Company under common-law
employment principles by any governmental agency or authority, or a court).
(d) In the event a Participant is no longer a member of an eligible class of
Employees and becomes ineligible to participate but has not incurred a Period of
Severance, such Employee will participate immediately upon returning to an
eligible class of Employees.
(e) In the event an Employee who is not a member of an eligible class of
Employees becomes a member of an eligible class, such Employee will participate
immediately if
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such Employee has satisfied the age and service requirements and would have
otherwise previously become a Participant.
2.02 Cessation of Participation
An Employee's participation in the Plan shall cease upon the complete
distribution of his Account under the Plan.
2.03 Establishment of Account
(a) The Administrative Committee shall establish and maintain or cause to be
established and maintained in respect of each Participant, an Account showing
his interest under the Plan and in the Trust Funds, and all other relevant data
pertaining thereto. Each Participant shall be furnished with a written statement
of his Account not less frequently than quarterly and upon any distribution to
him. In maintaining the Account under the Plan or causing them to be maintained,
the Administrative Committee may conclusively rely on the valuations of the
Trust Funds in accordance with the Plan and the terms of the Trust Agreements.
(b) The establishment and maintenance of, or allocations and credits to, the
Account of any Participant shall not vest in any Participant any right, title or
interest in and to any Plan assets or benefits except at the time or times and
upon the terms and conditions and to the extent expressly set forth in the Plan
and in accordance with the terms of the Trust Agreements.
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ARTICLE III
PARTICIPANT CONTRIBUTIONS
3.01 Procedure for Making Contributions
(a) After-Tax Contributions. Subject to any limitations set forth in the PR Code
from time to time, each Participant may designate, pursuant to procedures
established by the Employer, and contribute to the Plan an amount equal to not
less than 1% nor more than 10% (in whole percentage points) of his Compensation;
provided, however, that a Participant shall not contribute, or elect to have
contributed on his behalf, amounts with respect to Compensation received by him
after the close of the calendar year during which he had a Termination of
Employment. Notwithstanding any provision in the Plan to the contrary, in no
event may After-Tax Contributions exceed 10% of the Participants accumulated
Compensation since he or she became a Participant in the Plan.
(b) Before-Tax Contributions. Subject to the limitations set forth below, each
Participant may elect that his Employer shall contribute directly to the Plan an
amount equal to a whole percentage of his Compensation, not less than 1% nor
greater than 10% which amount shall be his Before-Tax Contribution. The maximum
Before-Tax Contribution by a Participant who is determined to be a Highly
Compensated Employee under Section 3.02, for the Plan Year in question, may be
further restricted or limited by the Administrative Committee from time to time.
(c) Notwithstanding any election in accordance with Section 3.01(b), if the
Administrative Committee at any time determines that all or any portion of the
Participant's Before-Tax Contributions should be treated as After-Tax
Contributions in order for the Before-Tax Contribution provisions of the Plan to
quality as a "qualified cash or deferred arrangement" for purposes of Section
1165(e) of the PR Code, or if the Actual Deferral Percentage standards set forth
in the PR Code are not met at the end of the Plan Year; then the Administrative
Committee, in its sole and absolute discretion, (i) may, in accordance with
Section 3.02(b) below, limit the amount which shall be contributed by the
Employer as Before-Tax Contributions after the date of such determination on
behalf of all or any portion of the Participants and (ii) shall
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distribute any excess Before-Tax Contributions made with respect to the Plan
Year to the affected Participants as soon as practicable after the end of the
Plan Year.
(d) The Employer shall (i) deduct a Participant's After-Tax Contributions from
the Compensation of the Participant on a per payroll basis, (ii) reduce the
Compensation that is paid to the Participant directly in cash by an amount equal
to the Participant's Before-Tax Contributions on a per payroll basis, and (iii)
contribute a Participant's After-Tax and Before-Tax Contributions to the Plan on
behalf of the Participant. The amounts so deducted and so contributed shall be
paid by the Employer to the Trustee no later than 15 days following the end of
the month with respect to which such amounts are to be so deducted and
contributed or within such shorter period of time as may be designated under the
PR Code, ERISA or related regulations.
(e) Effective with the pay check issued with respect to the first payroll period
beginning in any calendar month, or as of such other effective time as may be
determined by the Administrative Committee, a Participant may elect to change
the rate of his After-Tax Contributions to any other rate permitted by
Subsection (a) of this Section 3.01 and may elect to change the amount to be
contributed by the Employer directly to the plan as Before-Tax Contributions to
an amount permitted by Subsection (b) of this Section 3.01 with respect to such
contributions to be made after the effective date of the election, pursuant to
procedures established by the Administrative Committee.
(f) Not later than 15 days prior to the beginning of a calendar month or not
later than such other date as may be determined by the Administrative Committee,
a Participant may elect, pursuant to procedures established by the
Administrative Committee, (i) to suspend making After-Tax Contributions and (ii)
that the Employer should suspend making Before-Tax Contributions on his behalf,
all as of the beginning of such payroll period. Not later than 15 days prior to
the beginning of a calendar month or not later than such other date as may be
determined by the Administrative Committee, such Participant may elect (i) to
resume making After-Tax Contributions by indicating any amount of contributions
permitted under Subsection (a) and (ii) that the Employer shall resume making
Before-Tax Contributions on his behalf by designating an amount equal of
Compensation that is permitted under Subsection (b) hereof as Before-Tax
Contributions.
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(g) Contributions pursuant to this Section 3.01 shall be credited to each
Participant's Account.
(h) Notwithstanding any election in accordance with paragraph (b) of this
Section 3.01, the total amount of a Participant's Before-Tax Contributions for
any calendar year shall not exceed the lesser of $8,000 or 10% of the
Participant's annual Compensation or such other amount as may be adjusted from
time to time under applicable Puerto Rico law (the "Deferral Limit"). In
addition, Before-Tax Contributions by a Participant will be further limited by
contributions made by a Participant to an individual retirement account created
under PR Code Section 1169. If a Participant reaches the Deferral Limit, the
Administrative Committee, in its discretion, can direct that all or any portion
of such Participant's Contributions during such year shall be After-Tax
Contributions regardless of such Participant's elections pursuant to Sections
3.01(a) and 3.01(b), provided, however, that After-Tax Contributions shall never
exceed the limitations set forth in Section 3.01(a).
(i) Rollover from Other Plans. An Employee eligible to participate in the Plan,
regardless of whether he has satisfied the participation requirements of Section
2.01, may transfer to the Plan an Eligible Rollover Distribution provided that
such distribution is from an Eligible Retirement Plan. If such transfer is not a
direct transfer, such a transfer may be made only if the following conditions
are met:
(i) the transfer occurs on or before the 60th day following the
Employee's receipt of the distribution from the Eligible
Retirement Plan; and
(ii) the amount transferred is equal to any portion of the
distribution the Employee received from the Eligible
Retirement Plan, not in excess of the fair market value of
all property received in such a distribution .
The Administrative Committee shall develop such procedures, and may require such
information, from a Participant desiring to make such a transfer, as it deems
necessary or desirable to determine that the proposed transfer will meet the
requirements of the Section. Upon approval by the Administrative Committee, the
amount transferred shall be deposited in the Trust Funds and shall be credited
to the Participant's Account. Such rollover amount shall be one hundred percent
(100%) vested in the
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Participant, shall share in the income allocations in accordance with Article V,
but shall not share in the Employer Matching Contributions or the forfeiture
allocations. Upon termination of employment, the total amount of the rollover
contribution shall be distributed in accordance with the terms of the Plan.
Upon such a transfer by an Employee who is otherwise eligible to participate in
the Plan but who has not yet completed the participation requirements of Section
2.01, his rollover amount shall represent his sole interest in the Plan until he
becomes a Participant.
For purposes of this Subsection (i) an "Eligible Rollover Distribution" shall be
a distribution made to a Participant from another employer pension plan that
meets the qualification requirements of PR Code Section 1165; an "Eligible
Retirement Plan" shall be another employer pension plan that meets the
qualification requirements of PR Code Section 1165.
3.02 Limitations on Before-Tax Contributions
(a) Notwithstanding the foregoing provisions of this Article III, the
Administrative Committee shall limit the amount of Before-Tax Contributions made
on behalf of each "Highly Compensated Employee" to the extent necessary to
ensure that either of the following tests is satisfied:
(i) The "Actual Deferral Percentage" (as hereinafter defined) of the group
of eligible Highly Compensated Employees for the Plan Year is not more than
the Actual Deferral Percentage of all other eligible Employees ("non-Highly
Compensated Employees") multiplied by 1.25; or
(ii) The excess of the Actual Deferral Percentage for the group of eligible
Highly Compensated Employees over that of all other eligible non-Highly
Compensated Employees for the Plan Year is not more than two percentage
points, and the Actual Deferral Percentage for the group of eligible Highly
Compensated Employees for the Plan Year is not more than the Actual
Deferral Percentage of all other eligible non-Highly Compensated Employees
multiplied by 2.0.
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For the purposes of this Section 3.02, Section 3.04 and Section 3.05, "eligible"
means eligible to be a Participant of this Plan pursuant to Section 2.01(a).
For purposes of this Section 3.02, the term "Actual Deferral Percentage" shall
mean, for a specified group of Employees for a Plan Year, the average of the
ratios (calculated separately for each person in such group) of
(i) The aggregate of the Before-Tax Contributions (and such other
contributions which, in accordance with applicable rules and regulations
promulgated under the PR Code, may be aggregated with such Before-Tax
Contributions for purposes of demonstrating compliance with the
requirements of the PR Code) which are actually payable to the Plan on
behalf of each such Employee, to
(ii) Such Employee's Compensation for such Plan Year.
In the event it is determined prior to any payroll period that the amount of
Before-Tax Contributions elected to be made thereafter would cause the
limitation prescribed in this Section 3.02 to be exceeded, the amount of
Before-Tax Contributions allowed to be made on behalf of Highly Compensated
Employees shall be reduced to a rate determined by the Administrative Committee,
and any elections of future Before-Tax Contributions which exceed the rate
determined by the Administrative Committee shall be deemed to be After-Tax
Contributions for the remainder of the Plan Year, notwithstanding the
limitations on contribution rate changes in Section 3.01(e), but subject to the
limitation on After-Tax Contributions of Section 3.01(a). Except as is
hereinafter provided, the Participants to whom such reduction is applicable and
the amount of such reduction shall be determined pursuant to such uniform and
nondiscriminatory rules as the Administrative Committee shall prescribe.
(b) Notwithstanding the provisions of the foregoing paragraph, with respect to
any Plan Year in which Before-Tax Contributions on behalf of Highly Compensated
Employees exceed the applicable limit set forth in this Section 3.02, the
Administrative Committee shall reduce the amount of the excess Before-Tax
Contributions made on behalf of the Highly Compensated Employees (by reducing
such contributions in order of Actual Deferral Percentages beginning with the
highest), and shall distribute such
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excess Before-Tax Contributions (along with earnings attributable to such excess
Before-Tax Contributions, as determined pursuant to such rules and regulations
as shall be prescribed by the Puerto Rico Department of the Treasury) to the
affected Highly Compensated Employees as soon as practicable after the end of
such Plan Year, and in all events prior to the end of the next following Plan
Year. Any excess Before-Tax Contributions to be returned to Highly Compensated
Employees shall be calculated and distributed using the methods allowed under
the PR Code and its regulation. In lieu of such distribution of excess
Before-Tax Contributions, the Administrative Committee may, to the extent
permitted by applicable rules and regulations (and (i) except with respect to
situations in which Section 3.01(h) applies, and (ii) prior to March 15 of the
calendar year following the Plan Year in which such contributions are made or
such later date as may be permitted under the PR Code), recharacterize as
After-Tax Contributions for such Plan Year all or a portion of the Before-Tax
Contributions for Participants who are Highly Compensated Employees to the
extent necessary to comply with the applicable limit set forth in this Section
3.02 and subject to the limitation on After-tax Contributions of Section
3.01(a).
In lieu of either distributing or recharacterizing excess Before-Tax
Contributions, the Employer may, to the extent permitted by applicable rules and
regulations, make a qualified nonelective contribution on behalf of non-Highly
Compensated Employees in an amount sufficient to satisfy one of the
non-discrimination tests set forth above. Allocation of any such qualified
non-elective contribution would be to the Participant Before-Tax Account of each
non-Highly Compensated Employee in the same proportion that such Participant's
Before-Tax Contributions for the year bears to the total Participant Before-Tax
Contributions for the year for all non-Highly Compensated Employees of the
Employer.
(c) Notwithstanding any provision of Section 3.02(c) to the contrary, if
Before-Tax Contributions on behalf of Highly Compensated Employees in excess of
the applicable limit set forth in Section 3.02 are either distributed or
recharacterized, any Employer Matching Contribution attributable to the amounts
distributed or recharacterized shall be held unallocated in a suspense account
and, as of the end of the Plan Year, forfeited and added to and allocated with
Employer Contributions in the next following Plan Year.
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3.03 Distributions of Excess Deferrals
(a) Notwithstanding any other provision of the Plan, Excess Before-Tax Deferrals
(as hereinafter defined) and earnings allocable thereto as determined pursuant
to such rules and regulations as are prescribed by the Puerto Rico Department of
the Treasury, may be distributed no later than April 15 (or such later date as
may be permitted under the PR Code) to Participants who claim such allocable
Excess Before-Tax Deferrals (which shall be the "Excess Before-Tax Deferrals"
plus earnings, if any) for the preceding calendar year.
(b) For purposes of this Section 3.03, "Excess Before-Tax Deferral" means the
amount of Compensation which a Participant has elected to have the Employer
contribute to the Plan rather than receive it in cash, which is a Participant
Contribution under Section 3.01 for a calendar year that the Participant
allocates to this Plan pursuant to the claim procedure set forth in subsection
3.03(c) hereof.
(c) The Participant's claim shall be in writing; shall be submitted to the
Administrative Committee no later than March 1 (or such other date as the
Administrative Committee may specify); shall specify the amount of the
Participant's Excess Before-Tax Deferral for the preceding calendar year; and
shall be accompanied by the Participant's written statement that if such amounts
are not distributed, the Excess Before-Tax Deferrals, when added to amounts
deferred under other plans or arrangements described in PR Code Section 1165(e)
exceeds the limit imposed on the Participant in accordance with the applicable
provisions of the PR Code for the year in which the deferral occurred.
(d) Notwithstanding any provision of Articles III or IV to the contrary, any
Employer Matching Contribution attributable to an Excess Before-Tax Deferral
distributed to a Participant under Section 3.02(a) shall not be retained by or
distributed to the Participant (unless and to the extent permitted under the PR
Code and so determined by the Employer in a uniform, nondiscriminatory manner),
but shall be held unallocated in a suspense account and, as of the end of the
Plan Year, forfeited and added to and allocated with Employer Contributions in
the next following Plan Year.
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ARTICLE IV
EMPLOYER CONTRIBUTIONS
4.01 Amount of Employer Profit Sharing Contribution
Unless otherwise defined herein in an Appendix which describes rules applicable
to a specific Employer, an Employer may contribute to the Trust, as of the end
of each Plan Year, a percentage of the Employer's Net Profits as an Employer
Profit Sharing Contribution. The amount of such contribution, if any, shall be
determined by the Employer's Board of Directors in its sole discretion. Any such
contribution shall be made as soon as practicable after the close of the
Employer's Fiscal Year.
4.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be made by each Employer in accordance
with the provisions of an Appendix to the Plan which contains all provisions
related to, among others, Employer Matching Contributions for a specific
Employer
4.03 Allocation of Employer Contributions
Employer Profit Sharing Contributions shall be allocated only to the Employer
Accounts of Participants who are employed by the Employer on the last day of the
Plan Year and on behalf of Participants whose employment has terminated during
the Plan Year by reason of retirement, death or Total and Permanent Disability,
provided, however, that a Participant who transfers employment from his Employer
to an Affiliated Company at the request of his Employer or Popular, Inc. shall
be eligible to participate in Employer Profit Sharing Contributions for the Plan
Year of such transfer of employment with respect to Compensation earned to the
date of transfer. Employer Matching Contributions shall be made by the Employer
at the close of each payroll period. No Employer Matching Contribution shall be
made with respect to a Participant Before-Tax Contribution in excess of the PR
Code Section 1165(e)(7)(A) limit, as referred to in Section 3.01(h) and as
revised from time to time.
20
4.04 Investment of the Employer Contributions
The amounts allocated to each Participant pursuant to Section 4.03 shall be
credited to his Employer Accounts and invested in one or more of the Investment
Funds described in Section 5.01 and in the percentages designated by the
Participant in the investment election filed pursuant to Section 5.04 effective
at the time the amount is allocated.
4.05 Return of Employer Contributions
(a) If, after an Employer Contribution has been made and allocated, it should
appear that, through oversight, or a mistake of fact or law, a Participant (or
an Employee who should have been considered a Participant) who should have been
entitled to share in such contribution, receives no allocation or received an
allocation which was less than he should have received, the Employer may, at its
election and in lieu of reallocating such contribution, make a special make-up
contribution for the Employer Account of such Participant in an amount
sufficient to provide for him the same addition to his Employer Account as he
should have received. Similarly, if a Participant received an allocation which
was more than he should have received (or a Participant was inappropriately
included in the Plan), the Employer, at its election, may reallocate such
contribution, offset other Employer Contributions against such allocation, or
use such allocation to pay Plan expenses.
(b) To the extent permitted by ERISA, each contribution made to the Plan by the
Employer shall be made on the condition that it is currently deductible by the
Employer under PR Code Section 1023(n) for the taxable year with respect to
which the contribution is made. If a contribution is subsequently determined,
whether in whole or in part, not to be currently deductible as provided in the
preceding sentence, the Employer may request that an amount equal to the
disallowed deduction be returned to the Employer within one year of the date of
disallowance of the deduction of such Employer Contribution.
(c) Earnings attributable to a contribution that is returned pursuant to
Subsection (a) or (b) above shall not be withdrawn, but losses attributable
thereto shall reduce the amount returned to the Employer.
21
ARTICLE V
INVESTMENT OF CONTRIBUTIONS AND VALUATION OF ACCOUNTS
5.01 Establishment of Trust Funds
Popular, Inc. shall appoint one or more Trustees and establish one or more Trust
Funds to which all Employer Contributions shall be made. The Trust Funds shall
be held, invested, reinvested, used and disbursed by the Trustees in accordance
with the provisions of the Plan and one or more Trust Agreements entered into
between the Employer and the Trustees.
Popular, Inc. may remove the Trustees at any time upon the provision of notice
as required by the Trust Agreements. Popular, Inc. shall designate successor
Trustees as provided in the Trust Agreements. The Trustees shall have the sole
and complete discretion with respect to the management and control of the Trust
Funds including the exclusive and sole authority to vote on any matter involving
the shares of Popular, Inc. stock under the Plan except as provided under
Section 5.05. In addition, Popular, Inc. shall not influence the manner or
timing of any and all stock purchases made by the Trustees.
No person shall have any interest in, or right to, the Trust Funds or any part
thereof, except as expressly provided in the Plan or the Trust Agreements. Any
provisions of the Plan to the contrary notwithstanding, and except for the
payment of expenses of the Plan, and as provided in Section 4.06, no part of the
assets of the Trust Funds shall, by reason of any modification, amendment,
termination, or otherwise, be used for or diverted to purposes other than for
the exclusive benefit of Participants and their Beneficiaries.
5.02 Operation of the Trust Funds
All amounts of money, securities or other property received under the Plan shall
be delivered to the Trustees under the Trust Funds, to be managed, invested,
reinvested and distributed for the exclusive benefit of the Participants and
their Beneficiaries in
22
accordance with the Plan. Separate, commingled funds for the investment of Plan
assets held in the Trust Funds shall be established and maintained under the
Trust Funds.
5.03 Investment Funds
(a) There shall be established as part of the Trust Funds a reasonable range of
investment options. The Investment Committee may from time to time, in its
discretion, change, delete or add Investment Funds available within the Trust
Funds; provided that unless and until the Plan is amended accordingly, the Plan
shall provide common stock of Popular, Inc. as an investment option.
(b) Income from and proceeds of sales of investments in each Investment Fund
shall be reinvested in the same Investment Fund. Any income or other taxes
payable with respect to an Investment Fund shall be charged to such Investment
Fund.
(c) A Trustee may, from time to time, make temporary investments in short term
obligations of the United States Government, commercial paper, or other
investments of a short term nature, pending investment in an Investment Fund.
5.04 Investment Direction
(a) A Participant may elect that his Employee Contributions for each payroll
period be invested in 1% increments totaling 100% in one or more of the
Investment Funds. Such election must be made pursuant to procedures prescribed
by the Administrative Committee. Such election shall be effective until and
unless a Participant makes a different election for any period, but only as
provided for under Subsection 5.04(b) and Subsection 5.04(c). If the Participant
fails to file a timely initial investment election, he shall be deemed to have
elected to have 100% of his Employee Contributions and his Employer
Contributions invested in the stable, fixed income investment as may be
determined by the Administrative Committee. Until such time as the
Administrative Committee determines otherwise and so notifies Participants, a
Participant's share of any Employer Contributions, when allocated, shall be
invested in the same Investment Funds in the same proportions as the Participant
has elected in connection with investment of his Employee Contributions at the
time the amount is allocated.
23
(b) A Participant may change his election with respect to future Participant and
Employer Contributions effective pursuant to procedures prescribed by the
Administrative Committee, and may not change his election in any other manner
except as provided in Subsection 5.04(c).
(c) Effective as of the date determined by the Administrative Committee and
pursuant to procedures prescribed by the Administrative Committee, a Participant
may elect to have any or all of the value in any of the Investment Funds which
are credited to his Employee and/or Employer Accounts transferred and invested
in any one or more of the Investment Funds.
5.05 Voting of Stock
Any and all stock of Popular, Inc. held in the Trust Funds shall be voted by the
Trustees, in their sole discretion, except upon the occurrence of the following:
(a) In the event that any bona fide tender, exchange or similar offer to
purchase all or any portion of the outstanding stock of Popular, Inc. is made by
any person, all shares of such stock held by the Trust Funds shall be allocated
among and credited to the Accounts of Participants under the Plan based upon the
ratio of each Participant's Account to the total of all such Accounts,
determined as of the most recent Valuation Date coincident with or preceding the
date of any relevant vote or tender. Such stock shall remain allocated to the
Accounts of the Participants under the Plan subsequent to the pass-through of
such rights.
(b) In accordance with an event described in subsection (a), the Trustee shall
permit each Participant or, if applicable, his Beneficiary to direct the
Trustees as to the voting of such stock allocated to their Accounts. All
allocated stock as to which such instructions have been received in accordance
with procedures established by the Trustees (which may include an instruction to
abstain) shall be voted in accordance with such instructions.
24
5.06 Valuation
(a) As of each Valuation Date, each Trust Fund shall be valued at its fair
market value to reflect the effect of income received and accrued, realized and
unrealized profits and losses, and all other transactions since the preceding
Valuation Date. Such valuation shall be conclusive and binding upon all persons
having an interest in a Trust Fund.
(b) All contributions made on behalf of, or allocated to, a Participant shall be
credited to his Account. As of any Valuation Date, the value of a Participant's
Account shall be the value of such Account as of the immediately preceding
Valuation Date adjusted to reflect changes in the value of the Trust Funds
allocable thereto in accordance with (a) above plus the amount of contributions
and forfeitures, if any, credited thereto and less any distributions made
therefrom since the immediately preceding Valuation Date.
5.07 Accounting Procedures
The Administrative Committee shall have complete discretion to establish and
utilize an accounting system to account for the interest of each Participant. To
the extent permitted by the PR Code and Regulations, the Administrative
Committee may change the accounting system from time to time.
5.08 Payment of Expenses
All expenses which arise in connection with the administration of the Plan and
the Trust Funds including, but not limited to, the compensation of the Trustees
and of any recordkeepers, accountants, counsel, or other persons appointed by
the Administrative Committee, Popular, Inc. or the Trustee shall be paid out of
the Trust Funds, unless paid by the Employer.
25
ARTICLE VI
DISTRIBUTIONS
6.01 Distributions on Retirement or Total and Permanent Disability
Each Participant who terminates employment on account of his retirement or Total
and Permanent Disability shall have a nonforfeitable right to receive a
distribution of his entire Account. Distribution shall be made in accordance
with Sections 6.05 and 6.06.
6.02 Distributions on Death
Upon an Active Participant's death, his Beneficiary shall have a nonforfeitable
right to receive a distribution of the Participant's entire Account. Upon the
death of an Inactive Participant, his Beneficiary shall have a nonforfeitable
right to receive that portion of his Account which was vested in accordance with
Section 6.03. Distribution shall be made in accordance with Sections 6.05 and
6.06.
6.03 Distribution Upon Termination of Employment
Any Participant who has a Termination of Employment for any reason other than
Retirement, Total and Permanent Disability or death, shall have a nonforfeitable
right to receive that portion of his Account which is vested in accordance with
the following schedule:
----------------------------------------- --------------------------------------
Years of Service Nonforfeitable Vested
Interest
----------------------------------------- --------------------------------------
Less than 1 year 0%
----------------------------------------- --------------------------------------
1 but less than 2 years 20%
----------------------------------------- --------------------------------------
2 but less than 3 years 40%
----------------------------------------- --------------------------------------
3 but less than 4 years 60%
----------------------------------------- --------------------------------------
26
----------------------------------------- --------------------------------------
5 but less than 5 years 80%
----------------------------------------- --------------------------------------
5 or more years 100%
----------------------------------------- --------------------------------------
Distributions shall be made in accordance with Sections 6.05 and 6.06.
Upon the Termination of Employment of a Participant who is not otherwise 100%
vested in his Account, the Administrative Committee shall reflect any prior
distributions in determining the Participant's current vested interest in his
Account in order to avoid duplication of payments.
Notwithstanding anything in this Section to the contrary, a Participant who
transfers employment to an Affiliated Company at the request of his Employer or
Popular, Inc. shall be deemed to be 100% vested in his Account as of the
effective date of transfer of employment. Similarly, a Participant who transfers
employment to an Affiliated Company at his request shall not, unless such
Participants is 100% vested to his Account, be deemed to be 100% vested in his
Account as of the effective date of transfer of employment. Such a Participant
will not have incurred a Termination of Employment and his Account will be
transferred directly to his new employer's employee pension plan qualified under
PR Code Section 1165.
6.04 Forfeitures
That portion of a Participant's Account which shall not be vested at the date of
his Termination of Employment shall be forfeited. Forfeitures shall be used to
reduce the Employer's contribution to the Plan or at the Employer's discretion
redistributed among Participants. A former Participant who returns to employment
with the Employer after a Period of Severance of sixty (60) months will receive
credit for all his prior years of service for vesting purposes.
If a Participant receives a distribution and resumes employment covered under
the Plan before the Participant has a Period of Severance of sixty (60) months,
the Employer shall restore to the Employer Account of such a Participant an
amount equal to the dollar amount of the forfeitures from such Account if the
Participant repays to the Plan an amount equal to the dollar amount of the
distributions from the Participant's Employer Account. A repayment must be made
before the earlier of (a) 5
27
years after the first date on which the Participant is subsequently reemployed
by the Employer, or (b) the date the Participant incurs a Period of Severance of
sixty (60) months following the date of distribution.
6.05 Forms of Payment
Subject to the provisions of Section 6.10 and to an Appendix which may describe
special rules applicable to an Employer, a Participant will receive payment of
his vested Account in a cash lump sum or a combination of cash and shares of
Popular, Inc. equal in value to that of his Account.
6.06 Timing of Payment
Subject to the provisions of Section 6.10 and to an Appendix which may describe
special rules applicable to an Employer, a Participant (or Beneficiary) may
elect to have payment of his vested accounts payable to him under this Article
VI paid or commence as soon as practicable after:
(a) The date of his death, Retirement, Total and Permanent Disability or other
Termination of Employment based on the value of his vested Account determined as
of the Valuation Date coincident with or next following such date, or
(b) If such date occurs prior to his Normal Retirement Date, any Valuation Date
coincident with or preceding his Normal Retirement Date, based on the value of
his vested Account as of such Valuation Date.
In the event that a Participant does not elect the time as of which his
distribution is to commence then subject to Section 6.10, his Vested Accounts
shall be paid as soon as practicable following his Normal Retirement Date.
A Participant will be given a notice of his right to make an election under this
Section within the period beginning no earlier than 90 days before the Valuation
Date as of which the Participant's distribution is to begin and no later than 30
days before this Valuation Date. The Participant's election (and any spousal
consent, if applicable) must be made at least 30 days after the notice is
provided unless the Participant has
28
received notice of his or her right to have at least 30 days to review this
notice before making an election, the Participant makes an affirmative election
prior to the expiration of the 30 days and the distribution of the Participant's
benefit commences more than seven days after such notice is provided.
The Participant (or Beneficiary) shall provide to the Administrative Committee a
written election at least 30 days preceding any applicable Valuation Date,
indicating the date benefits are to be paid or commence and the Form of payment
elected.
A Participant's election regarding the form or timing of his benefit the payment
of his vested Account cannot be changed on or after the date on which benefit
payments have commenced.
6.07 Withdrawal of After-Tax Contributions
Prior to his Termination of Employment, a Participant may elect to withdraw, in
cash, any or all of the value of his After-Tax Contributions. Withdrawals of
After-Tax Contributions shall be subject to such procedures and conditions and
the Administrative Committee may determine, applied to all Participants in a
non-discriminatory manner.
6.08 Hardship Withdrawals
(a) Withdrawals may be made from the Employee Contribution Account on account of
a hardship. A Hardship Withdrawal of up to 50% of the Employee Contribution
Account may be permitted under the following circumstances:
(i) The distribution is necessary on account of an immediate and heavy
financial need of the Participant, and
(ii) The distribution is necessary to satisfy such financial need.
(b) A distribution will be deemed to be made on account of an immediate and
heavy financial need of the Participant if the distribution is made on account
of:
29
(i) Unreimbursed necessary medical expenses as described in Section
1023(aa)(2)(P) of the PR Code previously incurred by the
Participant, his spouse, children or any of his dependents (as
defined in PR Code Section 1025) or unreimbursable medical expenses
described in Section 1023(aa)(2)(P) of the PR Code necessary for
such persons to obtain medical care;
(ii) The first time purchase (excluding mortgage payments) or
construction of a principal residence for the Participant;
(iii) Payment of tuition, related educational fees, and room and board
expenses for the next 12 months of post-secondary education for the
Participant, his or her spouse, children or dependents (as defined
in PR Code Section 1025); or
(iv) The payment of rent or mortgage payments to prevent the
Participant's eviction from or foreclosure of the mortgage on his
principal residence.
(c) A distribution will not be treated as necessary to satisfy an immediate and
heavy financial need of a Participant to the extent the amount of the requested
distribution is in excess of the amount required to relieve the financial need
or to the extent such need may be satisfied from other resources that are
reasonably available to the Participant. This determination will be made on the
basis of all relevant facts and circumstance. A distribution may be treated as
necessary to satisfy a financial need if the Administrative Committee reasonably
relies upon the Participant's representation that the need cannot be relieved:
(i) Through reimbursement or compensation by insurance or otherwise; or
(ii) By reasonable liquidation of the Participant's assets, to the extent
such liquidation would not itself cause an immediate and heavy
financial need.
(d) The Administrative Committee shall apply the standards set forth in this
Section 6.08 on a uniform and non-discriminatory basis to all such Employees who
are Participants in the Plan.
30
6.08 Commencement of Benefit Payments
Notwithstanding the foregoing, unless the Participant elects otherwise,
distribution shall commence no later than the 60th day after the latest of the
last day of the Plan Year in which the Participant
(i) attains his Normal Retirement Date
(ii) attains his 10th anniversary of Plan participation or
(iii) terminates his employment.
6.09 Cash Outs
Notwithstanding any other provision of the Plan, if a Participant's vested
Account determined as of the Valuation Date immediately following his
termination of employment is $5,000 or less, his vested Account will be
distributed to him immediately in one lump sum payment. If the value of the
Participant's vested Account as of such Valuation Date exceeds $5,000 no
distribution shall be made to such Participant prior to the date he attains his
Normal Retirement Date without his written consent. In the absence of receipt of
such consent by the Administrative Committee, distribution to such Participant
shall be made in a lump sum as of the Valuation Date coincident with or next
following his Normal Retirement Date.
31
ARTICLE VII
PLAN ADMINISTRATION
7.01 Appointment of an Administrative Committee
Popular, Inc. shall appoint an Administrative Committee to serve as Plan
Administrator. The Administrative Committee shall consist of five or more
persons and shall serve at the pleasure of, and may be removed at any time by,
Popular, Inc. Popular, Inc. shall designate one of such persons to serve as
Chairman. Participants may be members of the Administrative Committee. No member
of the Administrative Committee shall receive compensation for his services as
such.
7.02 Operation of the Administrative Committee
A majority of the members of the Administrative Committee at the time in office
shall constitute a quorum for the transaction of business. All resolutions or
other action taken by the Administrative Committee shall be by vote of a
majority of its members present at any meeting, or without a meeting, by
instrument in writing signed by all its members.
The Chairman of the Administrative Committee shall appoint a Secretary who may
but need not be a member of the Administrative Committee. The Administrative
Committee may delegate any of its powers or duties among its members or to
others as it shall determine. It may authorize one or more of its members to
execute or deliver any instrument or to make any payment in its behalf. It may
employ such counsel, agents, clerical, accounting and actuarial services as it
may require in carrying out the provisions of the Plan, and to the extent
permitted by law it shall be entitled to rely upon all tables, valuations,
certificates, opinions, or other reports furnished by such persons.
7.03 Powers and Duties of the Administrative Committee
The Administrative Committee shall have all powers necessary to administer the
Plan except to the extent any such powers are vested in any other fiduciary by
the Plan or
32
by the Administrative Committee. The Administrative Committee may from time to
time establish rules for the administration of the Plan, and it shall have the
exclusive right to interpret the Plan and to decide any matters arising in
connection with the administration and operation of the Plan. The Administrative
Committee's rules, interpretations and decisions shall be applied in a uniform
manner to all Employees similarly situated and shall be conclusive and binding
on the Employer and on Participants and Beneficiaries to the extent permitted by
law.
The Administrative Committee shall compute and certify to the Trustees the
amount of retirement benefits payable under the provisions of the Plan to any
Participant terminating his employment with a retirement benefit or to any
Beneficiary.
7.04 Delegation of Responsibility
Each fiduciary shall discharge his duties with respect to the Plan solely in the
interest of the Participants and Beneficiaries, for the exclusive purpose of
providing benefits to such persons and defraying reasonable expenses of
administering the Plan, while using the care, skill, prudence, and diligence,
under the circumstances then prevailing that a prudent man acting in a like
capacity and familiar with such matters would use in the conduct of an
enterprise of like character and with like aims.
The members of the Administrative Committee and any person to whom the
Administrative Committee may delegate any of its powers under the Plan may
employ persons to render advice with regard to any responsibility he has under
the Plan. No fiduciary shall be liable for any act or omission of another person
in carrying out any fiduciary responsibility where such fiduciary responsibility
is allocated to such other person by or pursuant to the Plan, except to the
extent required by Section 405 of ERISA.
7.05 Indemnification of the Administrative and Investment Committees
Popular, Inc. may indemnify each member of the Administrative Committee and the
Investment Committee against all liabilities and expenses, including attorneys'
fees, reasonably incurred by him in connection with any legal action to which he
may be a party, or any threatened legal action to which he might have become a
party, by reason of his membership in the Administrative Committee, the
Investment Committee or
33
both, except with regard to any matters as to which he shall be adjudged to be
liable for willful misconduct in the performance of his duties as such a member.
34
ARTICLE VIII
CLAIMS PROCEDURE
8.01 Notification of Benefit Eligibility
The Administrative Committee shall notify Participants of the retirement
benefits to which they are entitled as soon as is practical following each
Participant's Termination of Employment. Filing of a claim shall not be required
for benefit commencement.
8.02 Initial Review of Claims
If a Participant or Beneficiary has reason to believe that he is entitled to
retirement benefits from the Plan in excess of those about which he is notified
in accordance with Section 8.01, he may file a claim in writing with the
Administrative Committee.
If the Administrative Committee denies the claim, the claimant shall be notified
in writing of the denial within 90 days after the Administrative Committee's
receipt of the claim (unless the Participant is given written notification
within the initial 90 days that an extension of not more than 90 days is
needed). The notice shall be written in a manner calculated to be understood by
the Participant or Beneficiary and shall (a) set forth the specific reason or
reasons for the denial, (b) make reference to the pertinent provisions of the
Plan on which the denial is based, (c) describe any additional material or
information that should be received before the claim request may be acted upon
favorably, and explain why such material or information, if any, is needed and
(d) inform the person making the claim of his right to request a review of the
decision by the Administrative Committee.
8.03 Review of Claim Denial
Any person who believes that he has submitted all available and relevant
information may request a review of the denial of his claim by the
Administrative Committee by submitting a written request for review within 60
days after the date on which such denial is received. This period may be
extended by the Administrative Committee for
35
good cause shown. The person making the request for review may examine pertinent
Plan documents. The request for review may discuss any issues relevant to the
claim.
The Administrative Committee shall decide whether or not to grant the claim
within 60 days after receipt of the request for review, but this period may be
extended for up to an additional 60 days in special circumstances. The
Administrative Committee's decision shall be written in a manner calculated to
be understood by the Participant or Beneficiary and, shall include specific
reasons for the decision, and shall refer to the pertinent provisions of the
Plan on which the decision is based.
36
ARTICLE IX
AMENDMENT OR TERMINATION OF THE PLAN OR
DISCONTINUANCE OF CONTRIBUTIONS
9.01 Right to Amend or Terminate the Plan
(a) Popular, Inc. may amend the Plan, retroactively or otherwise, at any time.
No such amendment may have the effect of vesting in the Employer any part of the
Trust Fund, or of diverting any part of the Trust Fund to purposes other than
for the exclusive benefit of Participants and Beneficiaries, until all
liabilities with respect to such persons have been satisfied or provided for. No
amendment shall deprive any Participant or Beneficiary of any retirement benefit
therefore vested in him.
In addition, no Plan amendment shall have the effect of decreasing the Accrued
Benefit (except as permitted under Section 204(g) of ERISA) of anyone who is a
Participant on the date the amendment is adopted or becomes effective, whichever
is later. For purposes of this paragraph, a plan amendment which has the effect
of (i) eliminating or reducing an early retirement benefit or a retirement-type
subsidy, or (ii) eliminating an optional form of benefit, with respect to
benefits attributable to service before the amendment shall be treated as
reducing accrued benefits.
The continuance of the Plan and the payment of contributions under the Plan are
entirely voluntary and are not assumed as contractual obligations of Popular,
Inc. or an Employer. Popular, Inc. reserves the right to terminate the Plan in
whole or in part or to discontinue contributions thereunder.
(b) Amendment to Vesting Provisions. If the vesting provisions of this Plan are
amended, (i) any Participant who, as of the end of the election period described
below had been credited with at least three Years of Service may irrevocably
elect to have his nonforfeitable interest computed without regard to the
amendment and (ii) a Participant's nonforfeitable interest shall not be less
than his nonforfeitable percentage computed under the Plan without regard to
such amendment. Notice of the amendment and the availability of the election
shall be given to each such Participant, and the election may be exercised by
the Participant by notice to the Administrative
37
Committee within 60 days after the later of (i) the Participant's receipt of the
notice, (ii) the day the amendment is adopted or (iii) the effective date of the
amendment.
(c) Amendment to Maintain Qualified Status. Notwithstanding anything to the
contrary in Section 8.01, Popular, Inc. in its discretion, may make any
modifications or amendments to the Plan, retroactively or prospectively, which
it deems appropriate to establish or maintain the Plan and the Trust Agreement
as a qualified employees' plan and tax-exempt trust under Sections 1165(a) and
(e) of the PR Code.
9.02 Result of Termination
(a) Upon termination of the Plan as to any Employer, such Employer shall not
make any further contributions under the Plan and no amount shall thereafter be
payable under the Plan to or in respect of any Participants then employed by
such Employer except as provided in this Article IX. To the maximum extent
permitted by ERISA, the rights of Participants no longer employed by such
Employer and former Participants and their Beneficiaries under the Plan shall be
unaffected by such termination and any transfers, distributions or other
dispositions of the assets of the Plan as provided in this Article IX shall
constitute a complete discharge of all liabilities under the Plan with respect
to such Employer's participation in the Plan and any Participant then employed
by such Employer.
(b) The interest of each such Participant in service with such Employer as of
the termination date in his Account, after payment of or provision for expenses
and charges and appropriate adjustment of the Accounts of all such Participants
for expenses, charges, forfeitures and profits and losses, shall be
nonforfeitable as of the termination date, and upon receipt by the
Administrative Committee of Puerto Rico Department of the Treasury approval of
such termination, the full current value of such amount shall be paid from the
Trust Fund in the manner described in Article VI or transferred to a successor
employee benefit plan which is qualified under PR Code Section 1165 or to an
individual retirement arrangement described in PR Code Section 1169; provided,
however, that in the event of any transfer of assets to a successor employee
benefit plan the provisions of Section 10.04 will apply.
38
(c) All determinations, approvals and notifications referred to above shall be
in form and substance and from a source satisfactory to counsel for the Plan. To
the maximum extent permitted by ERISA, the termination of the Plan as to any
Employer shall not in any way affect any other Employer's participation in the
Plan.
39
ARTICLE X
MISCELLANEOUS PROVISIONS
10.01 Contract of Employment
The Plan shall not be deemed to constitute a contract between any Employee and
the Employer or to be a consideration or an inducement to any Employee for his
employment by the Employer. Nothing contained in the Plan shall be deemed to
give any Employee the right to be retained in the employ of the Employer or to
interfere with the right of the Employer to discharge or to terminate the
employment of an Employee at any time without regard to the effect of such
action on his rights under the Plan. No Participant or Beneficiary shall have
any rights against the Employer for benefits payable under the Plan other than
rights, if any, which he may have with respect to the Trust Fund.
10.02 Furnishing of Information
Unless otherwise expressly provided in the Plan, all benefits to which any
Participant may be entitled shall be determined in accordance with the
provisions of the Plan as in effect on such Participant's Severance from Service
Date. In order to receive any benefits under the Plan, a Participant must
furnish the Administrative Committee with such information as may reasonably be
required for purposes of the proper administration of the Plan.
10.03 Assignment or Alienation of Benefits
Any benefit payable under the Plan shall not be subject in any manner to
assignment, alienation, anticipation, sale, transfer, pledge, encumbrance, lien
or charge, and any attempt to cause any such benefit to be so subjected shall
not be recognized except to such extent as may be required by law.
40
10.04 Merger of Plans
In the event of any merger or consolidation of the Plan with, or transfer of
assets or liabilities of the Plan to, any other qualified plan, each Participant
shall (if such other plan then terminates) be entitled to receive a benefit
immediately after any such merger, consolidation or transfer which is equal to
or greater than the benefit to which he would have been entitled immediately
before such merger, consolidation or transfer (if the Plan had then terminated).
10.05 Substitute Payee
If a Participant or Beneficiary entitled to receive any retirement benefits from
the Plan is in his minority, or is, in the judgment of the Administrative
Committee, legally, physically or mentally incapable of personally receiving and
receipting for any distribution, the Administrative Committee may make
distributions to his legally appointed guardian, or to such other person,
persons or institutions as it may judge to be then maintaining or to have
custody of the Payee.
10.06 Domestic Relations Order
For purposes of this Article XI, a Domestic Relations Order shall refer to a
judgment, decree or order (including the approval or a property settlement) that
is made pursuant to a state domestic relations or community property law, and
which relates to the provisions of child support, alimony payments, or marital
property rights to a spouse, child or other dependent of a Participant.
10.07 Qualified Domestic Relations Order
For purposes of this Article XI, a Qualified Domestic Relations Order shall
refer to a Domestic Relations Order that (a) clearly specifies (i) the name and
last known mailing address of the Participant and of each person given rights
under such Domestic Relations Order, (ii) the amount or percentages of the
Participant's benefits under this Plan to be paid to each person covered by such
Domestic Relations Order, (iii) the number of payments or the period to which
such Domestic Relations Order applies, and (iv) the name of this Plan; and (b)
does not require the payment of a benefit in a
41
form or amount that is (i) not otherwise provided for under the Plan, or (ii)
inconsistent with a previous Qualified Domestic Relations Order.
10.08 Procedures involving Domestic Relations Orders
Notwithstanding the provisions of Section 10.03 to the contrary, upon receiving
a Domestic Relations Order, the Administrative Committee shall segregate in a
separate account or in an escrow account the amounts payable to any person
pursuant to such Domestic Relations Order, pending a determination whether such
Domestic Relations Order constitutes a Qualified Domestic Relations Order, and
shall give notice of the receipt of the Domestic Relations Order to the
Participant and each other person affected thereby.
If, within 18 months after receipt of such Domestic Relations Order, it is
determined by the Administrative Committee, by a court of competent
jurisdiction, or otherwise, that such Domestic Relations Order constitutes a
Qualified Domestic Relations Order, the Administrative Committee shall direct
the Trustee to segregate the amounts (plus any interest thereon) in an account
for the person (or persons) entitled thereto under the Qualified Domestic
Relations Order. Such individual shall, thereafter, be considered a terminated
vested Participant under the Plan. If it is determined that the Domestic
Relations Order is not a Qualified Domestic Relations Order or if no
determination is made within the prescribed 18-month period, the segregated
amounts shall be desegregated as though the Domestic Relations Order had not
been received, and any later determination that such Domestic Relations Order
constitutes a Qualified Domestic Relations Order shall be applied only with
respect to benefits on the date of such determination.
The Administrative Committee shall be authorized to establish such reasonable
administrative procedures as is deemed necessary or appropriate to administer
this Section 10.08. This Section 10.08 shall be construed and administered so as
to comply with the requirements of Section 206(d)(3) of ERISA.
42
10.09 Gender and Number
The masculine pronoun, whenever used herein, shall include the feminine pronoun,
and the singular number shall include the plural number, unless the context of
the Plan clearly indicates otherwise.
10.10 Governing Law
The Plan shall be governed by the laws of the Commonwealth of Puerto Rico to the
extent not preempted by applicable Federal law.
IN WITNESS WHEREOF, Popular, Inc. has caused this Plan to be executed as of
this 1st day of January, 2001.
By: /s/ Teresa Loubriel
Name: Teresa Loubriel
Title: Vice President
43
Appendix No. 1 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 1 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of Popular
Mortgage, Inc. This Appendix No. 1 contains rules and features of the Plan
that are applicable exclusively to Employees of Popular Mortgage, Inc.
Except as provided otherwise in this Appendix No. 1, when administering the
Plan for the Employees of Popular Mortgage, Inc. the Plan shall be read,
construed and interpreted in conjunction with Appendix No.1.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include bonuses, overtime
pay, commissions, car allowance and variable pay.
1.02 Employer
Popular Mortgage, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 1 an Employee must be such of the Employer.
1-1
1.04 Years of Service
In addition to the meaning set forth in Section 1.34 of the Plan, Years of
Service shall include service with Puerto Rico Home Mortgage Corporation
provided that the Employee was employed by Puerto Rico Home Mortgage at the
time of acquisition of said corporation by Popular, Inc.
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall be determined in accordance with the following formula:
(i) If the Employer's net income for its fiscal year that ends with or
within the Plan Year for which a contribution is made is less than or
equal to 10% of ROE (as defined below), the Employer Profit Sharing
Contribution shall be equal to 2% of the total Compensation paid to all
Participants in the Plan.
(ii) If the Employer's net income for its fiscal year that ends with or
within the Plan Year for which a contribution is made is greater than
10% of ROE (as defined below) but less than or equal to 15% of ROE (as
defined below), the Employer Profit Sharing Contribution shall be equal
to 3% of the total Compensation paid to all Participants in the Plan.
(iii) If the Employer's net income for its fiscal year that ends with
or within the Plan Year for which a contribution is made is greater
than 15% of ROE (as defined below), the Employer Profit Sharing
Contribution shall be equal to 4% of the total Compensation paid to all
Participants in the Plan.
For purposes of this Section 2.01 "ROE" shall mean the Employer's return on
equity for the Employer's fiscal year that ends with or within the Plan
Year for which a contribution is made.
1-2
Notwithstanding, Employer Profit Sharing Contributions to the Plan shall
not exceed the lesser of the Employer's net income for its fiscal year that
ends with or within the Plan Year for which a contribution is made or 15%
of the total Compensation paid to all Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the first 6% of a
Participant's Before-Tax Contribution or After-Tax Contribution, provided
that an Employer Matching Contribution will be made first on account of the
Participant's Before-Tax Contributions.
1-3
Appendix No. 2 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 2 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of Popular
Leasing & Rental, Inc. This Appendix No. 2 contains rules and features of
the Plan that are applicable exclusively to Employees of Popular Leasing &
Rental, Inc. Except as provided otherwise in this Appendix No. 2, when
administering the Plan for the Employees of Popular Leasing & Rental, Inc.
the Plan shall be read, construed and interpreted in conjunction with
Appendix No. 2.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include overtime pay.
1.02 Employer
Popular Leasing & Rental, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 2 an Employee must be such of the Employer.
2-1
1.04 Years of Service
In addition to the meaning set forth in Section 1.34 of the Plan, Years of
Service shall include a service with Inversiones Internacionales, Inc.,
Velco and Metropolitana de Prestamos, Inc. provided that the Employee was
employed by Inversiones Internacionales, Inc., Velco or Metropolitana de
Prestamos, Inc. at the time of acquisition by Popular, Inc.
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall not exceed the lesser of the Employer's net income for
its fiscal year that ends with or within the Plan Year for which a
contribution is made or 15% of the total Compensation paid to all
Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the Participant's
first 8% of Before-Tax Contribution.
2-2
Appendix No. 3 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 3 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of Popular
Securities, Inc. This Appendix No. 3 contains rules and features of the
Plan that are applicable exclusively to Employees of Popular Securities,
Inc. Except as provided otherwise in this Appendix No. 3, when
administering the Plan for the Employees of Popular Securities, Inc. the
Plan shall be read, construed and interpreted in conjunction with Appendix
No. 3.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include, for Employees (i)
employed in the Employer's Retail Division performance bonus, deferred
commissions and any Compensation in excess of $150,000; and (ii) employed
in the Employer's Institutional Division any Compensation in excess of
$150,000.
1.02 Employer
Popular Securities, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 3 an Employee must be such of the Employer.
3-1
1.04 Years of Service
In addition to the meaning set forth in Section 1.34 of the Plan, Years of
Service shall include a service with Marketing One Securities, Inc., CS
First Boston (Puerto Rico) Inc. and BP Capital Markets, Inc. provided that
the Employee was employed by Marketing One Securities, Inc., CS First
Boston (Puerto Rico) Inc. or BP Capital Markets, Inc. at the time of
acquisition by Popular, Inc.
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall not exceed the lesser of the Employer's net income for
its fiscal year that ends with or within the Plan Year for which a
contribution is made or 15% of the total Compensation paid to all
Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the Participant's
Before-Tax Contribution.
3-2
Appendix No. 4 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 4 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of Popular
Finance, Inc. This Appendix No. 4 contains rules and features of the Plan
that are applicable exclusively to Employees of Popular Finance, Inc.
Except as provided otherwise in this Appendix No. 4, when administering the
Plan for the Employees of Popular Finance, Inc. the Plan shall be read,
construed and interpreted in conjunction with Appendix No. 4.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include overtime pay,
commissions, Christmas bonus and car allowance.
1.02 Employer
Popular Finance, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 4 an Employee must be such of the Employer.
4-1
1.04 Years of Service
In addition to the meaning set forth in Section 1.34 of the Plan, Years of
Service shall include a service with Best Finance Corporation provided that
the Employee was employed by Best Finance Corporation at the time of
acquisition by Popular, Inc.
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall not exceed the lesser of the Employer's net income for
its fiscal year that ends with or within the Plan Year for which a
contribution is made or 15% of the total Compensation paid to all
Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the Participant's
first 5% Before-Tax Contribution.
4-2
Appendix No.5 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 5 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of GM Group,
Inc. This Appendix No. 5 contains rules and features of the Plan that are
applicable exclusively to Employees of GM Group, Inc. Except as provided
otherwise in this Appendix No. 5, when administering the Plan for the
Employees of GM Group, Inc. the Plan shall be read, construed and
interpreted in conjunction with Appendix No. 5.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include overtime pay,
commissions, incentive pay, bonuses and any other compensation in excess of
base salary.
1.02 Employer
Popular Finance, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 5 an Employee must be such of the Employer.
5-1
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall not exceed the lesser of the Employer's net income for
its fiscal year that ends with or within the Plan Year for which a
contribution is made or 15% of the total Compensation paid to all
Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the Participant's
first 6% of Before-Tax Contribution. Employer Matching Contributions may
not exceed 30% of the maximum allowable Employee Before-Tax Contributions.
5-2
Appendix No. 6 to the Popular, Inc.
Retirement Savings Plan for Puerto Rico Subsidiaries
INTRODUCTION
The purpose of this Appendix No. 6 is to supplement the provisions of,
and form a part of, the Plan with respect to the Employees of Popular
Insurance, Inc. This Appendix No. 6 contains rules and features of the Plan
that are applicable exclusively to Employees of Popular Insurance, Inc.
Except as provided otherwise in this Appendix No. 6, when administering the
Plan for the Employees of Popular Insurance, Inc. the Plan shall be read,
construed and interpreted in conjunction with Appendix No. 6.
Article I
DEFINITIONS
In addition to the definitions set forth in the Plan, the following
definitions, when used in the Plan and this Appendix, shall have the
respective meanings set forth below unless the context clearly indicates
otherwise:
1.01 Compensation
In addition to the meaning set forth in Section 1.06 of the Plan,
Compensation considered under the Plan shall not include Christmas Bonus
and Managerial Bonus.
1.02 Employer
Popular Finance, Inc.
1.03 Participant
In addition to the meaning set forth in Section 1.20 of the Plan, for
purposes of this Appendix No. 6 an Employee must be such of the Employer.
6-1
1.04 Years of Service
In addition to the meaning set forth in Section 1.34 of the Plan, Years of
Service shall include a service with R&B Insurance Agency, Inc. provided
that the Employee was employed by R&B Insurance Agency, Inc. at the time of
acquisition by Popular, Inc.
Article II
EMPLOYER CONTRIBUTIONS
2.01 Amount of Employer Profit Sharing Contribution
In addition to the dispositions of Section 4.01, an Employer Profit Sharing
Contribution shall not exceed the lesser of the Employer's net income for
its fiscal year that ends with or within the Plan Year for which a
contribution is made or 15% of the total Compensation paid to all
Participants in the Plan.
2.02 Amount of Employer Matching Contribution
Employer Matching Contributions shall be equal to 50% of the Participant's
first 6% of Before-Tax Contribution.
6-2
